Sustainability Must Drive Business Success
Consider these morsels from last week's Wall Street Journal: "By 2050, there could be two billion cars on the road - twice as many as there are today." "Energy demand is expected to be 35 percent higher in 2030 than in 2005." "Pollution of drinking water is Americans' #1 environmental concern."
If you're of the mind that the global economy is an Energizer battery that will simply go, go, go - without needing outside attention - think again.
Our world economy faces unprecedented challenges, whether from soaring population growth, resource constraints, a warming climate or myopic financial markets.
Solutions to these challenges are right in front of us, and a few were even suggested in the WSJ: "40 percent of new cars could be electric (by 2050)." "Energy efficiency is, more than ever, a critically important 'energy source'."
Some companies see opportunity in these challenges and are pursuing bold projects that take sustainability to a new level - projects like Frito-Lay's planned zero emissions potato chip plant in Arizona; Interface's closed-loop systems for recycling carpets; ZipCar's pay-by-the-hour model for car driving; and Intel making environmental metrics a component of every employee's compensation.
But what's missing is totality. Business innovation to scale sustainable solutions exponentially - across entire business models, across all products and services - is what we need to put our global economy on a sustainable path. Scattered shoots of sustainability will not do the job.
How do we achieve such sweeping change?
First, companies must recognize that making themselves more sustainable will make them more successful in the 21st century.
Consider the example of climate change: reducing greenhouse gas emissions to the levels scientists say are needed will require a massive shift to clean, energy-efficient technologies in the coming decades. Businesses that put themselves in front of this trend - whether in their operations and supply chains, or products and services they offer - will benefit the most.
"We are looking for companies that are managing these risks and developing opportunities," said Anne Stausboll, who oversees more than $200 billion of investments at the nation's largest public pension fund, the California Public Employees' Retirement System (CalPERS).
Second, corporate success on sustainability will require comprehensive strategies that extend to all aspects of the business - from the board room, to employees, to suppliers, to consumers.
Among the key components of any successful strategy are the following:
* Elevate sustainability in company governance, including direct board oversight and accountability over environmental and social issues, more diversity and special expertise on boards, and linking executive and other employee compensation to sustainability goals;
* Robust regular dialogues with key company stakeholders on sustainability challenges, including employees, investors, NGOs, suppliers and consumers;
* Open reporting on sustainability strategies, goals and accomplishments;
* Systematic performance improvements to achieve environmental neutrality and other sustainability goals across the entire value chain, including operations, supply chains and products.
The global economy will surely grow, but so must our stewardship of the planet we rely on. The best performing companies of the 21st century will be those that recognize this evolving new order, and invest and act now.
For more information see, The 21st Century Corporation: Ceres Roadmap for Sustainability